Stock Market Bulls Neutralize Bears, But More To Prove

The S&P 500 Index rallied on Tuesday, closing near the highs of the session for the third straight day. Futures are pointing higher into Wednesday morning.

With Tuesday being the first trading day of the new month (which is historically strong), it wasn’t entirely surprising to see a bit of bullishness. After this fairly impressive 3-day rally, the intermediate postures are back to weakly bullish on all four key U.S. stock market indices.

Traders have been rewarded for taking bullish trades near the tail-end of January’s significant sell-off.

With the exception of the Dow Jones Industrial Average, the 30 day moving averages for most indices continue to travel lower and represent resistance.

The Russell 2000 showed strength on Tuesday (+1.1%), with the Dow Industrials (+0.78%) and NASDAQ Composite (+0.75%) coming in just behind.

All four major stock market indices have a mix of green and red arrows; the Dow Jones Industrial Average is most likely to transition to “3 Green Arrows” first.

Elsewhere, Bitcoin rallied again and ended at around $38,000 on Tuesday; it’s had a strong week thus far but this has been the time where sellers often step in so we are at a critical juncture.

The U.S. Dollar fell for the third straight day on Tuesday, but continues to have a strongly bullish posture and is trading above its rising 30 day moving average. Gold and oil closed higher with the weaker Dollar; Gold still has a strongly bearish posture but Oil is considered strongly bullish.

Energy remained atop our Sector Selector tool. Technology took over the bottom sector ranking for the first time in at least 4 years.

Our trade application example featured selling an iron condor on Boeing (BA) due to it now trading nearly in the exact middle of its 3-month range, when it’s failed to break aggressively higher or lower during that time period.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Stock Market Outlook Video (for February 2) – News and Analysis

Twitter:  @BrandonVanZee and @MarketScholars

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.

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